Start This Year’s Financial Planning By Thinking For Yourself Don’t Rely On Fund Managers, Pick Own Stocks

If you insist on making financial resolutions for the year ahead, you can begin by applying a talent most people have but don’t always use. It is called common sense.

That, at least, seems to be the substance of numerous books, articles, adult education courses and seminars on the subject of handling money wisely. What they say, in effect, is that almost anyone can improve their finances by using his or her head.

Strange, isn’t it, that people pay good money for such advice? But maybe the reminder is worth it.

So, the first rule of financial resolutions is to do your own thinking.

This doesn’t mean ignoring the vast amount of information available on the Internet and in almost any public library, but rather to assimilate the information available in such resources and make it one’s own.

It is not always done. Millions of small savers and investors today seek to avoid decision-making, hoping that someone else can decide for them. They spend good money to have others think for them, and often are bitterly disappointed with the results.

Mutual funds, for example, serve a marketplace need, and so have grown to assets of more than $4 trillion from under $100 billion in just 15 years. But millions of investors own funds simply because they fear to select stocks on their own.

While most households now have an interest in the stock market - through pension plans, company investment programs, mutual funds, investment clubs and the like - direct ownership of stocks has fallen. And this has happened during the greatest bull market of all time.

There is little sound reason for this being so in an information era that offers the same basic investment information to amateur and professional investors alike, and in which hundreds of large companies offer shares directly to the public at minimal commissions.

The second resolution is to set goals and priorities.

Without goals the investor is like a ship that departs the harbor with no particular destination in mind. You’ll find that reminder in all the investor magazines. Without priorities, you’ll spend on frivolities rather than investing.

And, with neither, almost inevitably you’ll fall victim to procrastination, a condition in which you know what you should do but you don’t do it. It is, says Eric Gelb, one of the weirdest and costliest afflictions of mankind.

Though he too doesn’t fully understand the condition, Gelb has done his best with “The Personal Budget Planner,” a labor of love. Set modest goals and priorities, he says, or depression rather than implementation will follow.

Procrastination is especially difficult to understand when there are easy and effortless ways to save or invest.

Companies offer 401(k) plans in which employees may choose to have automatic deductions from paychecks for investment in mutual funds or companies, and some employers match all or a part of contributions up to a certain percentage of annual paychecks.

And just as easily accomplished, some mutual funds offer additional shares through automatic monthly deductions from checking accounts. And, as in similar automatic plans, the investors receive up-to-date printouts of the account and its earnings.

No matter what you may have heard, there’s nothing wrong with resolutions so long as they have elements of modesty, simplicity and common sense. And, of course, a sense of responsibility for the results. The latter cannot be assigned.